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Grocery Shopping
Woman sighs while grocery shopping
As the results of the 2024 election made clear, the voters are concerned about the affordability of their daily lives—groceries, gasoline, rental and mortgage rates—and their plans for the future—retirement, educating their children, and perhaps some fun. Trump campaigned on the promise to bring these costs down, and voters gave him a narrow victory.
It is now clear that there was and is no coherent plan to address affordability, just the opposite. Due to Trump's tariff policy, prices are projected to rise, not fall, and the unemployment rate is projected to be higher than the low level that he inherited. The tariff is a consumer tax, and the resulting revenue will help fund his planned income tax cuts. The Trump tariffs, combined with the proposed income tax cuts, will result in a massive income redistribution upward with the largest share going to the wealthiest Americans.
Faced with this outcome, Democrats have an opportunity to gain voter support from those who seek better management of the U.S. economy. They could start by responding directly to the economic illiteracy of Project 2025 and Elon Musk's DOGE.
Tax Payer Dollars
The premise of Project 2025 is that public spending is, by definition, waste, fraud and abuse of taxpayer dollars. From this perspective mass indiscriminate firings at federal agencies are good; any tasks no longer performed by government will either be taken on by the private sector, or they were not worth doing in the first place. This is a misdirection intended to advance the twin goals of deregulation and of financing Trump's tax cuts.
To the contrary, a market system requires an efficient public sector to provide those goods and services that cannot be produced and distributed efficiently by a market of profit-seeking firms. For example, national defense protects all citizens within a country, whether or not they pay taxes. Similarly, when nature strikes with hurricanes, tornadoes, earthquakes, disaster relief is a public responsibility performed by state, local or federal governments, or via public-private partnerships, and financed by taxation or contributions.
Public Goods: Research Labs and Central Banking
Consider two additional examples of public goods that have been threatened lately: First, independent research labs essential to scientific advance, such as childhood cancer research and anti-virus vaccines, and second, the independent Federal Reserve System that controls inflation and unemployment through the management of the money supply.
Scientific research contributes to foundational knowledge that, once discovered, is disseminated to permit application in business and government. The integrity of the research is enhanced by the independence of the researchers, the evaluation and validation of the research results occurs through the rigors of peer review, not political review. It is funded through federal, state, local and private grants, and from tuition revenue generated by the joint research/teaching enterprise in universities.
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A recent example of the relationship between basic and applied research is the development of the Covid-19 vaccine. The understanding of the mRNA technology was the result of decades of basic research in government and university labs. When Covid-19 hit, a specific vaccine was developed within weeks based on that foundational knowledge.
Another public good—seldom recognized as such—is the "money supply"—basically cash and bank deposits circulating in our economy.) The Federal Reserve System controls this amount in order to pursue twin goals: low unemployment and low inflation. Because achieving these objectives requires long range planning and analysis, the "Fed" must remain independent of short-run political pressures from politicians. This independence adds to the confidence of long-term investors and is key to economic growth and stability. Clearly those investors value that independence; when Trump recently threatened to remove Fed chair, Jerome Powell, the stock market abruptly dropped 972 points in response and bounced back when Trump relented.
Voters Need More Assurance
In upcoming elections, voters should have a choice among candidates who are knowledgeable about economics and experienced in handling complex economic policy. For example, it is likely that several candidates in the 2028 presidential primaries will be successful governors claiming they would be good stewards of the economy—e.g., Beshear, Shapiro, Pritzker, Moore, Newsom, Whitmer.—e.g., Andy Beshear, Josh Shapiro, JB Pritzker, Wes Moore, Gavin Newsom and Gretchen Whitmer.
That list of governors raises a key problem with our elections: when elections with a multiple candidate field are decided by plurality rule, multiple candidates whose experience and policy positions are similar tend to split the voters most closely aligned with them. This split permits less-preferred candidates to win the primary by small margins. Rank choice voting is a superior way to match candidates to the policy preferences of the majority of voters when there are multiple candidates. (The June WISDEM convention provides a good opportunity to advance the conversation on ranked choice voting. See https://shepherdexpress.com/news/issue-of-the-month/ranked-choice-voting-beware-of-no-labels-third-party-candi/ for more on how rank-choice voting works.)
